Sasol settles with Competition Commission regarding allegations of collusion in its fertiliser and phosphoric acid businesses

Sasol Nitro, a division of Sasol Chemical Industries Limited, has reached a settlement agreement with the Competition Commission of South Africa, relating to its fertiliser and phosphoric acid businesses. The agreement is subject to confirmation by the Competition Tribunal.
 
In January this year, Sasol announced that as part of its ongoing legal compliance programme, Sasol Limited initiated a competition law compliance review in July 2008 of all Sasol businesses. The competition law compliance review proactively analyses business activities across Sasol Limited and its subsidiaries to ensure that such activities are compliant. Although it was envisaged in January 2009 that the review process would be completed during the first half of 2009 current progress indicates that the review should be completed in the second half of 2009.
 
"We announced at the start of this year that the compliance review is rigorously scrutinising all our businesses and that in some areas problems of potential non-compliance had been identified. We have worked closely with the Competition Commission in seeking resolution to these matters and while this settlement agreement is an important step, there is much work ahead and we remain committed to following through on each matter in order to achieve full compliance," Sasol chief executive Pat Davies said.
 
As a result of findings by the internal competition law compliance review, Sasol engaged with the Competition Commission in December 2008, with the intent to settle the Sasol Nitro matters including alleged collusive conduct in the fertiliser business, issues referred to the Competition Tribunal by Nutri-Flo and Profert as well as issues related to phosphoric acid.
 
The settlement agreement relates to matters of alleged collusion. Sasol and the Commission remain in discussion regarding outstanding allegations of abuse of dominance.
 
Fertiliser business
 
During December 2008, Sasol's internal competition law compliance review revealed evidence of potentially collusive conduct in the fertiliser business of Sasol Nitro. The matter was reported to the Competition Commission by Sasol management when they became aware of the conduct.
 
The review indicated that the conduct in respect of fertilisers ceased in 2004 and although these activities are not identical to those referred to in the Nutri-Flo matter a further review concluded that committees were set up to coordinate business practices, derive forecasted market shares and ensure balance of supply and demand. Accordingly, Sasol entered into settlement discussions with the Commission in respect of the Nutri-Flo matter.
 
The remainder of the Nutri-Flo matter and the Profert matter, which deal with allegations of abuse of dominance in the market place, form the subject-matter of continuing engagement between Sasol and the Competition Commission.
 
Phosphoric acid business
 
In August of 2007, the Competition Commission initiated a complaint against Foskor and Sasol relating to possible contraventions of the Competition Act in respect of phosphoric acid. The complaint against Sasol related to its agreement with Foskor which was concluded to ensure the continued viability of Sasol's Phalaborwa phosphoric acid operations and was not intended to breach any competition laws. Upon receiving external legal advice, Sasol concluded that certain provisions of these agreements may be a contravention of the Competition Act. The restrictive clause within the agreement was terminated in 2007.
 
Settlement conclusion
 
An administrative penalty of the amount of R188,01 million has been agreed by Sasol and the Competition Commission.
 
While many of these activities took place and then ceased some years ago, Sasol deeply regrets that these activities occurred. Sasol remains committed to rooting out any non-compliance within its businesses and to achieving full compliance with all legislation.
 
"The conduct, identified in these investigations of the Sasol Nitro business, is unacceptable and runs counter to our Sasol values," said Sasol Nitro MD, Marius Brand.
 
"This settlement agreement is an important step and we are looking forward to concluding outstanding matters," Brand said.